Tesla Self-Driving Is Getting So Good, It Will Cost More

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Elon Musk had two positive tweets for weary

Tesla

investors to digest on Friday. For starters, new versions of the company’s driver-assistance software are coming soon. What’s more, the price of the features is going up.

Tesla (ticker: TSLA) calls its driver-assistance features Full Self Driving, or FSD. The system is designed to be like a door-to-door driving service, improving safety and convenience. A driver still needs to be engaged all the time, but the car will do most of the work most of the time.

Tesla began rolling out higher-functioning versions of the software in 2021, starting with its safest drivers. (Tesla can generate a safety score based on driving behavior.) New versions have been coming out frequently. Now Musk teased version 11 Friday, which he says has “many architectural upgrades.”

Musk’s ultimate goal is to build a system that is so good, drivers don’t need to pay attention at all. He has also hinted in interviews late this past year that Tesla might reach that level of functionality by the end of 2022. It isn’t the first time Musk has given an aspirational goal that will be hard to meet.

Even if truly self-driving Teslas aren’t on roads by Dec. 31, 2022, the system makes driving easier. FSD currently retails for $10,000 or for a subscription price of $100 or $200 a month, depending on vehicle configurations.

The price is going up, though, to $12,000. Musk says subscription pricing will rise when new versions of the software are widely available.

Higher prices might reflect higher confidence in the FSD system. That’s a positive that investors can take away from the Friday tweets. On the flip side, higher pricing might hurt demand for FSD, but FSD sales haven’t really been driving the stock lately. Vehicle deliveries have been.

Tesla delivered more than 308,000 vehicles in the fourth quarter, a record and far better than Wall Street projected. The stock jumped 13% in response to the news, but then harder days came as investors started to worry about higher interest rates, which hurt growth stocks more than others.

Tesla stock dropped 3.5% Friday amid the continuing selloff in richly valued growth stocks. Shares are now down about 3% year to date, despite the stellar delivery numbers.

The

Nasdaq Composite
dropped 1% Friday. The

S&P 500
dropped 0.4%. The

Dow Jones Industrial Average
was down less than 5 points on Friday, closing at 36,232.

Write to Al Root at [email protected]